Succession planning. It evokes an image of a strong matriarch, or patriarch, and their adult children sitting around the dinner table determining who will be the next to lead the family enterprise. It may also be suggestive of a formal written plan that ensures everyone is on the same page. But more than a plan or a dinner table discussion, preparing for the future increasingly requires the right mindset—one that runs much deeper than thinking simply about who will lead, but also how they will lead through a time of profound technological change.
All families, in every industry, bear witness to digital transformation. Digital agility is no longer a nice-to-have—it’s a must-have. Succession, in this context, depends on a family enterprise becoming resilient in the face of digital disruption and adapting to the ever-changing market. Fortunately, this mindset can be cultivated and nurtured across generations. Let’s explore this further.
Characterizing a future-focused mindset
To foster a forward-thinking mentality, it’s imperative that future family enterprise leaders embody four key attributes, as originally described in KPMG’s Digital Mindset Framework: courage, curiosity, connectedness and adaptability.
Courage is demonstrated through a strong sense of initiative, the confidence to make bold decisions and the humility to admit mistakes. As future leaders, the rising generation should be empowered to take initiative and grow their responsibilities while being held accountable to objectives.
Fostering courage as part of succession planning also allows the family enterprise culture to flourish.
Curious organizations are those in which digital innovation and experimentation are understood to be everyone’s job, not just the leaders. As it happens, a 2022 KPMG Enterprise study found that Canadian rising generation leaders are courageous: they are bigger risk takers than their peers in other regions. However, their innovativeness ranked relatively lower.
To embrace innovation, the rising generation should tap into the proven potential of collaboration. When emerging leaders are given the resources and the opportunity to innovate, they ask more questions, become better problem solvers, challenge the status quo and derive creative insights.
Every part of the family enterprise system—from the front office to the back office, from the owner’s council to the family meeting—must work in tandem to deliver against the big picture. To foster a connected family enterprise, the rising generation should take an inclusive approach to everything, gathering diverse perspectives and consistently asking what should be but isn’t.
Connecting with voices across the system ensures changes are designed, from the start, with all stakeholders in mind. In turn, the sustainability of digital adoption—in fact of any business change—is increased and the likelihood of necessary redesigns down the road is reduced.
In a family enterprise, the ability to change reflects an adaptive and flexible culture. As future leaders, the rising generation should be encouraged to be nimble and collaborative, and to take on the unknown. To put this into practice, cross-functional collaboration, ever-evolving roles and a “love of learning” mentality will allow the rising generation to keep their focus continuously on the soft and technical skills most in need—as individuals and as a business—at any given time.
Families who accept the inevitability of change take an optimistic but practical approach to new ideas. Across generations, they are continuously learning and updating their perception of what is “best” for the family enterprise.
Adopting a future-focused mindset
A succession plan focused on building resilience and digital agility in the rising generation starts with a vision for the future of the family enterprise. In thinking about how the rising generation will drive that vision, consider the following strategies:
- Engage in candid conversations. This will help today’s family enterprise leaders formulate a better understanding of the rising generation’s aspirations to drive innovation in the business. Candid conversations also present an opportunity for them to communicate their fears and goals around the future.
- Determine their interest level. It’s best that current leaders not to assume what the rising generation thinks about the business and its ability to stay ahead of the rapid change in a digital era. Instead, they should be identifying development opportunities and finding synergies between the rising generation’s interests and skills, and the expertise required to navigate the business through the changing world.
- Cultivate a purpose-driven enterprise. Asking thought-provoking questions (Why are we an enterprising family? What does the enterprise mean to you and your family?) will help create alignment across generations. Leaders should be prepared to listen and reflect on what the rising generation shares and rediscover and reshape their purpose as needed.
- Encourage experimentation and failure. Allowing the rising generation to learn, fail and succeed on their own will help build personal resiliency, foster an entrepreneurial spirit and ultimately strengthen trust in intergenerational relationships.
- Create a support network. Having an ecosystem of trusted advisors and non-family peers can empower the rising generation to seek out new perspectives, develop emerging skills and build confidence in their ability to lead through change.
Throughout the succession planning journey, family enterprise leaders must also reflect on the uniqueness that comes from their family history, values, dynamics and governance. This is their differentiating value proposition that can drive intergenerational alignment—and, in combination with the right mindset, one can embrace disruption and ensure lasting success for the enterprise and the family.
Looking for more inspiration and insight into the unique challenges of running a family enterprise in Canada and the advantages of working with professional family enterprise advisors? We’ve got you covered.
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